There seems to be no end to the Tata Docomo financial dispute. Even as both the companies (Tata Sons and Japan's NTT Docomo) are locked in a legal battle over a payment issue involving a JV company here, India's finance ministry has now asked the Enforcement Directorate (ED) to investigate the $2.5 billion joint venture deal.

AFP

According to a Bloombergreport, the finance ministry has asked the ED to find out whether Tata Sons violated the country's foreign exchange rules while selling a stake in its wireless unit in 2009 to the Japanese company.

"The Enforcement Directorate will probe if the transaction, which took place in 2009, breached India's foreign exchange management act," the Bloomberg report said quoting unidentified people.

Tata Sons in an email reply denied of any knowledge about the ED probe of the financial transaction, the Bloomberg report said.

Post the exit of Docomo from the Indian JV in 2014, both the companies have failed to arrive at a solution, and the Japanese firm instead chose to go for international arbitration.

In June this year, the London Court of International Arbitration ordered Tata Sons to pay $1.17 billion to the Japanese wireless carrier for failing to uphold the contract, the Bloomberg report added.

The joint venture agreement had a clause that promised DoCoMo at least 50 percent of the value of its original investment if it decided to exit in five years.

Tata Sons had in November 2014 made an application to the RBI to purchase DoCoMo's 26.5 percent stake at Rs 58.045 per share (totalling about Rs 7,250 crore) - half the price which the Japanese firm paid in 2009. DoCoMo had invested $2.2 billion in Tata Teleservices.

However, the RBI rejected its earlier proposal to buy DoCoMo's stake in the struggling joint venture for about Rs 7,250 crore or Rs 58 a share.

Following a fair value arrived at by PriceWaterhouseCoopers, the Tata group then offered to buy out Japanese telecom giant's stake in Tata Teleservices at Rs 23.34 per share, more than 50 percent lower than earlier offer of Rs 58.

This enraged DoCoMo, which then moved the London Court of Arbitration to get a valuation of Rs 58 per share.

Although the London Court has directed Tatas to honour the agreement, the Indian government cited that Docomo's overall stake value has fallen below 50 percent of its investment due to accumulated losses at Tata Teleservices, and hence the Japanese major can now exit at just a 'fair value'.

While Tatas have deposited $1.17 billion with the Delhi High Court, the case is still pending with the court for the enforcement of the award.